What is a strategic resource? A strategic resource is an asset that is valuable, rare, difficult to imitate, and nonsubstitutable(Barney, 1991).
Valuable resources help an organization to capitalize on opportunities and defend against threats. For example, South West Airlines is profitable almost every year because of the staff and the culture they have that puts employees first. So, the employees give their best and as a result of the airlines profitable. While in recent past during 2001 and 2008 the airlines' industry hit an air pocket in the USA. Gary Kelly the CEO or South West Said: “How can you say you care about your employees if you allow your company to become unprofitable?”
In South West’s culture strikes, layoffs are rare as a result employee morale is up and that reflects in customer service. Job satisfaction plays a critical role. Kelly’s other formula is “Take care of employees, employees will take care of customers, customers will take care of the company and its investors.”
Difficult to Imitate includes the patents, trademarks, copyrighted materials which are mostly legally protected. Other than these, there are other things such as culture evolve inside the organization that is difficult for competitors to imitate.
For example, South West has rags to riches story, when the airline had to borrow other airline’s luggage carrier and then use magnets to put their own logo. Such past gave the airlines an unusual culture that other airlines cannot imitate. Frugality or the attitude to save cost also made them use only one type of jet, and the airlines save a lot on maintenance.
Finally, South West’s nonsubsrutable culture is a critical place and competitors cannot really do about that. While the management takes care of the air west crew and the crew takes care of the passengers.
In strategic management, the four parts of resource-based provide organization sustained competitive advantage. Nothing about South West's culture is indeed patented or trademarked or copyrighted, yet United or American cannot copy any bit of it. Mainly because the culture evolved naturally within the inside of South West.
If we consider Transaction Cost economics, we see South West uses only 737 and being an Airlines company it won’t be cost-effective to manufacture the jets and maintain them. While South West using only 737 is a huge advantage and helps them save cost, but backward integrating manufacturing will not be economical(Gulliver,2012).
Specific to South West Resource-based view provides the best idea about the organization. Transaction cost economics does not really tell us why South West has the culture it has and why that sets it apart from other airlines. The culture is not only about using one type of jet or keeping the cost at a minimum. As it was frugal airlines, using one type of jet made it more efficient and helped them minimize cost. Since this is a service industry the resource-based view helps us understand the company’s strategic advantages better, for other manufacturing company Transaction Cost economic might explain the advantage better.
References
Ketchen, D & Short, J. (2012). Strategic Management: Evaluation and Execution. This book is licensed under a Creative Commons by-nc-sa 3.0 license. Retrieved from: http://jsmith.cis.byuh.edu/books/strategic-management-evaluation-and-execution
Lewis, Al(May,2013). Southwest CEO says all you need is LUV. Retrieved from https://www.marketwatch.com/story/southwest-ceo-says-all-you-need-is-luv-2013-05-15
Gulliver, (June, 2012). The secrets of Southwest's continued success. Retrieved from https://www.economist.com/gulliver/2012/06/18/the-secrets-of-southwests-continued-success
Valuable resources help an organization to capitalize on opportunities and defend against threats. For example, South West Airlines is profitable almost every year because of the staff and the culture they have that puts employees first. So, the employees give their best and as a result of the airlines profitable. While in recent past during 2001 and 2008 the airlines' industry hit an air pocket in the USA. Gary Kelly the CEO or South West Said: “How can you say you care about your employees if you allow your company to become unprofitable?”
In South West’s culture strikes, layoffs are rare as a result employee morale is up and that reflects in customer service. Job satisfaction plays a critical role. Kelly’s other formula is “Take care of employees, employees will take care of customers, customers will take care of the company and its investors.”
Difficult to Imitate includes the patents, trademarks, copyrighted materials which are mostly legally protected. Other than these, there are other things such as culture evolve inside the organization that is difficult for competitors to imitate.
For example, South West has rags to riches story, when the airline had to borrow other airline’s luggage carrier and then use magnets to put their own logo. Such past gave the airlines an unusual culture that other airlines cannot imitate. Frugality or the attitude to save cost also made them use only one type of jet, and the airlines save a lot on maintenance.
Finally, South West’s nonsubsrutable culture is a critical place and competitors cannot really do about that. While the management takes care of the air west crew and the crew takes care of the passengers.
In strategic management, the four parts of resource-based provide organization sustained competitive advantage. Nothing about South West's culture is indeed patented or trademarked or copyrighted, yet United or American cannot copy any bit of it. Mainly because the culture evolved naturally within the inside of South West.
If we consider Transaction Cost economics, we see South West uses only 737 and being an Airlines company it won’t be cost-effective to manufacture the jets and maintain them. While South West using only 737 is a huge advantage and helps them save cost, but backward integrating manufacturing will not be economical(Gulliver,2012).
Specific to South West Resource-based view provides the best idea about the organization. Transaction cost economics does not really tell us why South West has the culture it has and why that sets it apart from other airlines. The culture is not only about using one type of jet or keeping the cost at a minimum. As it was frugal airlines, using one type of jet made it more efficient and helped them minimize cost. Since this is a service industry the resource-based view helps us understand the company’s strategic advantages better, for other manufacturing company Transaction Cost economic might explain the advantage better.
References
Ketchen, D & Short, J. (2012). Strategic Management: Evaluation and Execution. This book is licensed under a Creative Commons by-nc-sa 3.0 license. Retrieved from: http://jsmith.cis.byuh.edu/books/strategic-management-evaluation-and-execution
Lewis, Al(May,2013). Southwest CEO says all you need is LUV. Retrieved from https://www.marketwatch.com/story/southwest-ceo-says-all-you-need-is-luv-2013-05-15
Gulliver, (June, 2012). The secrets of Southwest's continued success. Retrieved from https://www.economist.com/gulliver/2012/06/18/the-secrets-of-southwests-continued-success
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